Making Tax Digital (MTD) is an ambitious programme to modernise the UK tax system by requiring businesses and individuals to maintain digital accounting records and engage with HMRC in real time. AIA supports the aims of MTD, which seek to enhance the efficiency, resilience and accessibility of the UK tax system for taxpayers and their agents.
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) requires businesses and landlords with qualifying income to maintain digital records and update HMRC each quarter using compatible software.
MTD ITSA will be introduced in phases for sole traders and landlords, based on their gross annual income from self-employment and property (before expenses, allowances, and tax deductions).
From April 2026, sole traders and landlords with gross income over £50,000 will need to keep digital records and submit quarterly updates to HMRC.
You or your client will need to use Making Tax Digital for Income Tax from 6 April 2026 if all the following apply. You or your client:
Rules introduced under the Making Tax Digital initiative mean that all VAT registered businesses need to keep digital records and submit VAT Returns to HMRC using compatible software.
Latest webinar
This session gives a clear, practical overview of Making Tax Digital (MTD) for Income Tax and what sole traders and landlords need to do to prepare with confidence. It explains who will be affected and when, using the phased mandation dates and real‑life income examples to help those affected to understand how their own property income triggers MTD requirements.
The webinar covers the core obligations accountants and clients will face, including digital record‑keeping, quarterly updates and submitting an end‑of‑year tax return through MTD‑compatible software. It demystifies what counts as qualifying income, how jointly owned properties are treated, and the simplifications available to reduce administrative burden.
Importantly, it also covers exemptions, including digital exclusion and automatic exemptions, so those affected can assess their position early. With clear explanations of software options and the benefits of signing up voluntarily ahead of mandation, this presentation details how to plan, budget and transition smoothly to MTD, avoiding last‑minute surprises and staying compliant.
Additional MTD past webinars and supporting materials are available through CPD On Demand.
Mira, AIA’s AI MTD Advisor, is here to support members with quick, reliable guidance on Making Tax Digital. Whether you’re checking your obligations, looking for practical steps to stay compliant, or simply want more information on the latest MTD requirements, you can use the chatbot at any time for concise, up‑to‑date answers. Mira is designed to help you navigate MTD with confidence and save time in your day-to-day work.
Try asking "How should I prepare my clients for MTD?"
Keep updated with the latest announcements from HMRC including finding out about using Making Tax Digital for Income Tax, software choices and step by step guidance for sole traders, landlords, and agents.
This toolkit from HMRC is intended to help you prepare yourself and your clients for MTD for Income Tax.
HMRC have launched an interactive MTD tool: Check if you need to use Making Tax Digital for Income Tax.
MTD for Income Tax Self-Assessment (MTD ITSA) becomes mandatory for the first taxpayers from April 2026. The new tool is intended to make it simpler for taxpayers (and their agents) to understand if they are in scope of MTD ITSA and, if so, when they need to start complying with the requirements.
Video explanation for agents of Making Tax Digital for Income Tax. View all playlist.
In the November 2025 Budget, HMRC announced an expanded set of circumstances under which taxpayers can be exempted from joining Making Tax Digital for Income Tax Self Assessment (MTD ITSA). This included confirmation of new permanent exemptions, such as for individuals operating under a Power of Attorney and those under a Court of Protection deputyship, as well as additional one‑year deferrals for certain specialist groups, including recipients of trust and estates income, individuals using averaging adjustments, and qualifying care providers. These changes mean that HMRC is now accepting exemption applications across a broader range of situations than previously allowed.
From 29 January 2026 taxpayers can apply directly by contacting HMRC, either by phone or in writing, explaining why it is not reasonable or practical for them to use MTD‑compatible software. Applications may also be made by an authorised agent, or by a friend or family member with proper authorisation, following the steps set out in HMRC’s updated guidance.
Budget 2025 (published 26–27 November 2025) included several important updates relating to Making Tax Digital for Income Tax Self Assessment (MTD ITSA). The announcements focused primarily on easing the transition for early joiners and clarifying penalties, deferrals, and exemptions. Further changes to MTD emerging at the Budget included a ‘soft landing’ for late filing penalties applying to quarterly updates in 2026/26.
The Government confirmed that taxpayers joining MTD ITSA in April 2026 will not receive penalty points for late submission of their first four quarterly updates. This applies only to the April 2026 cohort and not to taxpayers mandated in 2027 or 2028.
On 21 July 2025 (Legislation Day / L Day), the Government and HMRC published draft legislation and policy papers for Finance Bill 2025–26, including several significant updates to Making Tax Digital (MTD). Key points included:
Within the Spring Statement 2025 the government announced some important policy developments for MTD ITSA which clarify and improve key areas of policy design and support HMRC's delivery plans.
The key details can be read in ’Modernising the Tax System Through Making Tax Digital'.
At the Autumn Budget on 30 October 2024, the Government made a clear commitment to delivering MTD for ITSA.
It also confirmed that the first taxpayers to join MTD for ITSA will be those with income from trading and property of over £50,000, who will be required to join in April 2026. Those with income between £30,000 and £50,000 will then join a year later in April 2027.
A commitment was also made to expand MTD for ITSA to those with income over £20,000 by the end of this Parliament, with the precise timing to be set out at a future fiscal statement.
On 22 February 2024, the Income Tax (Digital Requirements) (Amendment) Regulations 2024 were laid before Parliament. These regulations amend the existing Income Tax (Digital Requirements) Regulations 2021 to reflect the changes to the timetable for MTD for ITSA originally announced in December 2022 and the Autumn Statement 2023 changes (see below).
Alongside these, HMRC also published an Update Notice which provides more information as to what should be included in quarterly updates under MTD for ITSA.
Under the requirements of MTD, individuals who are subject to income tax on the profits of their trade, profession, vocation or property business will be required to keep their accounting records electronically (either using suitable software or on spreadsheet) and file quarterly returns to HMRC with details of their income and expenditure together with any other information that HMRC specifies. A digital tax return will then be submitted after the tax year to finalise the individual’s tax position.
Although the frequency of reporting is going to change, the timing of tax payments will not and the current system of payments on account and balancing payment by 31 January after the tax year is expected to remain in place for the foreseeable future.
The mandation of MTD will be phased, with the exact date dependent on the taxpayer's income:
Although the Government has said they remain committed to extending MTD to general partnerships, no 'start date' has been confirmed.
All other partnerships (e.g. those that have corporate partners and Limited Liability Partnerships) are also expected to be required to join MTD at a future date (to be confirmed).
There will be limited automatic exemptions from MTD and other exemptions which will need to be claimed.
See MTD exemptions guidance on GOV.UK for further details.
All businesses within MTD for ITSA will have to provide quarterly updates of their income and expenses. These quarterly updates will be cumulative, and cover the following periods, with the following deadlines, regardless of the accounting period end of the business:
| Period covered | Filing deadline | |
| Quarterly update 1 | 6 April to 5 July | 7 August |
| Quarterly update 2 | 6 April to 5 October | 7 November |
| Quarterly update 3 | 6 April to 5 January | 7 February |
| Quarterly update 4 | 6 April to 5 April | 7 May |
Alternatively, businesses can make a 'calendar quarter election' which allows them to draw up quarterly updates to the end of the previous month. Where this election is made, the quarterly updates will be as follows:
| Period covered | Filing deadline | |
| Quarterly update 1 | 1 June to 30 June | 7 August |
| Quarterly update 2 | 1 April to 30 September | 7 November |
| Quarterly update 3 | 1 April to 31 December | 7 February |
| Quarterly update 4 | 1 April to 31 March | 7 May |
The first quarterly updates under MTD for ITSA will therefore be due for filing by 7 August 2026, and will cover either the quarter ended 5 July 2026, or 30 June 2026 (where a calendar quarter election is in place).
Separate quarterly updates will be required for each trade or property business carried on by an individual. There is no requirement to make tax or accounting adjustments to the information provided in quarterly updates.
An Update Notice published on 22 February 2024 sets out the categories of income and expenses which will need to be reported in the quarterly updates. This also confirms that, where a business has an annual turnover below the VAT registration threshold, it may choose to provide the total of all income and the total of all expenses in the quarter, instead of the totals of the amounts falling within each category of transaction. Retailers can also opt to record their daily gross takings, rather than each individual sale they make.
At the Autumn Statement 2023, it was announced that relaxed reporting requirements would apply for joint property owners, who can choose to only report their share of the property income (and not expenses) in their quarterly updates. Further information on this relaxation is expected later this year in the form of a Joint Property Notice. A draft of this notice was published for consultation in December 2023.
The EOPS was intended to perform a similar role to the self-employment or property pages on the current ITSA return - i.e. making the required tax and accounting adjustments and finalising the tax position of the trade or business.
At the Autumn Statement on 22 November 2023, it was announced that the EOPS would be removed as a formal requirement. Instead, this process will be rolled into the Final Declaration.
The Final Declaration will bring together all business and personal information needed to determine the final tax liability, including information from MTD sources of income (e.g. trading and property income) and non-MTD sources of income (e.g. dividends and interest), allowances and reliefs.
Only a single final declaration will be required for each taxpayer. This will be due by the normal self-assessment deadline of 31 January following the relevant tax year.
In order to access MTD services and to supply updates on behalf of clients, agents need an Agent Services Account (ASA). Each agency will have just one ASA per firm, and will be able to set up staff with administrator or assistant access to the account. Many AIA members may already have created an ASA in order to submit MTD for VAT returns or Trust Registration Service returns.
A basic outline of the ASA and how to set one up can be found here.
HMRC publish details of any down time for maintenance or service issues.
Enabling primary legislation for MTD for Income Tax was included in Sections 60 to 61 and Schedule 14 of the Finance (No.2) Act 2017.
On 24 March 2026, updated Regulations setting out more details on MTD were laid. These replace the previous Regulations which were laid on 23 September 2021 and amended by the Income Tax (Digital Requirements) (Amendment) Regulations 2024. Tertiary legislation comprising an Update Notice and a Digital Record Keeping Notice was published in early 2025.
Individuals within MTD for Income tax will be required to use software to keep their records and submit returns to HMRC via their Application Programming Interface (API).
There are essentially three different types of MTD compliant software:
Where a spreadsheet is used, the relevant data must be digitally transmitted from the spreadsheet or other source where the digital records are kept, directly to HMRC. The summary information for completion of the quarterly and final returns must not be physically re-typed into another software package.
The current list of MTD compatible software for income tax is here.
HMRC's guidance on MTD for ITSA can be accessed from its collection page.
HMRC have also produced a Making Tax Digital for Business – stakeholder communications pack which contains a variety of information for both Income tax and VAT, including some frequently asked questions.
Disclaimer: The information provided on this page is for general informational purposes only. AIA does not guarantee the accuracy, completeness, or reliability of the information presented. AIA is not liable for any errors, omissions, or any losses, injuries, or damages arising from the use of this information. Members are advised to verify the information independently before making any decisions based on it.